GENEVA — Sri Lanka will lose duty free preferential access to the European Union from Aug. 15 for goods valued at 1.24 billion euros, or $1.5 billion at current exchange — of which the most affected are apparel items and fisheries products — following EU claims that Sri Lanka has failed to agree to a set of demands to improve its poor human rights record.
EU member states initially decided on Feb. 15 to temporarily withdraw Sri Lanka’s lucrative Generalized System of Preferences tariff benefits, but had given the Asian nation six months to usher in the necessary reforms. The punitive action, revealed Monday, came after Sri Lanka failed to respond to a new offer by the EU that it was willing to allow Sri Lanka to benefit from the GSP+ measures until the end of 2010, providing it agreed to address a list of outstanding issues.
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The offer was made in a letter, dated June 17, to Sri Lanka’s foreign minister, Gamini Lakshman Peiris. However, Sri Lanka’s ambassador to the World Trade Organization, Kulatunga Perera, told WWD Tuesday the conditions imposed on Sri Lanka “are definitely an encroachment on the sovereignty of the country.”
“No country can impede our sovereignty at any time,” he said.
With regard to textiles and apparel products impacted by the measure, the envoy said: “We will be looking to diversify our market.”
But he pointed out the sector took “a lot of care to maintain all core labor standards.” Perera conceded the withdrawal will affect the bottom line for apparel suppliers, many of which will face duty hikes of up to 10 percent for affected items.
The suspension of the GSP+ effectively means that, from Aug. 15, Sri Lankan exports that have benefited from duty free access under the scheme, such as some apparel products like T-shirts, would revert to the standard GSP tariffs, which for apparel is around 9 to 12 percent.
In 2008, Sri Lankan shipments to the EU were valued at 2.2 billion euros, or $2.7 billion, the equivalent to 38 percent of its total exports, followed by the U.S. with nearly 29 percent. According to EU statistics, Sri Lankan apparel exports alone to the 27-member state bloc were worth about 1.15 billion euros, or $1.4 billion.